Growth Gurus: Co-Founder and CEO of Ritual
Insight's Growth Gurus series showcases inspiring leaders from our portfolio of growth-stage software and internet companies. In this interview, we sat down with Ray Reddy, Co-founder and CEO of Ritual.
How did you get your start in business?
My first job out of school for the mobile company, Blackberry. It was an exciting time to witness how mobile was going to change computing and the way that people interacted with the real world. In 20018, I started my first company, which was focused around media and mobile. From there, the company was acquired by Google and I went to work there for four years. That was also an incredible learning experience on how to build a big scalable company.
What ultimately inspired you to create Ritual?
At Google, I led products for mobile commerce. One of the things that we realized was that digital had transformed a lot of different industry segments like advertising, knowledge, retail and transportation. Yet the one segment that's been insulated from digital has been local commerce. The way that people discover and transact with local businesses has remained unchanged for many decades now. It's a problem that many companies have tried to solve and that we spent a lot of time thinking about it. If we were able to utilize digital within this large segment, we believed that we would be making people’s lives easier and ultimately help businesses be more efficient.
With Ritual, what we realized is that the reason that companies haven’t been successful isn’t because of a lack of demand. Many companies believed that if you build a great mobile order product and it’s beautifully designed then people would gravitate towards that product. We thought of it differently by thinking of our product as being more of a social app. The reason for that is because if you don’t have enough endpoints and enough people that you’re connected to, then the product has zero utility and no value.
We had to unlock the local graph, neighborhood by neighborhood, to have a density of local businesses in each area, which was time consuming and expensive. But the conviction that we had was if you didn't approach it in this way, you ultimately weren't building something that was useful for people and it was destined to fail.
What were some of the challenges that you experienced in the early days?
The first few months of our company was very defining. Our hypothesis that the reason that companies trying to tackle this problem haven’t been successful is because they didn’t have enough local density had to be proven true. This could feel like an overwhelming challenge to solve because, for example, if you have to solve it across a large city, it would mean onboarding thousands of merchants and building a lot of products in order to make it work.
One of the things that we were uniquely good at was that we were able to take these very complicated problems and break it down into something very simple by running quick experiments. One of the first experiments that we ran was testing if we could develop local identity with a single office. We picked our office building, which had 300 people who worked there and about 15 coffee shops and restaurants within a five-minute walk. We went to each floor of our office and had conversations with people to see if they would be interested in being connected to local businesses and then did the same with those 15 businesses. In only 90 days, we built a skeleton product and then when we saw the data, we had the conviction to go after the problem, neighborhood by neighborhood.
What was your go-to-market strategy after you had built the product?
The problem that we’ve struggled with is that few companies have gone to market, neighborhood by neighborhood. We believe that we have to do in this way because people don't walk around and buy coffee or lunch across an entire city. It mostly happens within a very short radius.
Since traditional growth channels weren't available to us, we had to invent our own organic growth channels and we've done so through partnerships. We partner with a lot of property managers and commercial building owners as an amenity. Word of mouth is our growth strategy. and word of mouth. We believe in building a product that's so good that our restaurants want to give it to their customers and our users want to spread the word to other users. This constitutes 95% of our growth.
Harley: How have you managed to grow without a traditional marketing traditional strategy?
The reality is that our marketing constraints resulted in innovation. Paid acquisition wasn't really an option for such a hyper-local business model, which forced us to develop our own growth channels. For example, one of the big things a lot of restaurants worry about is cannibalization and paying third parties fees for customers who would have ordered from them anyway. We were able to solve that problem by giving them credit for their customers. If they bring one of their customers onto the platform, they don't pay any fees. Not only has that helped with growth, it's has allowed us to differentiate and build integrity with our partners.
As the CEO of a fast-growing and scaling company, how have you personally evolved as a leader?
Over the last four or five years, it has been challenging to have to keep reinventing myself every six months. The way that you lead a ten-person team, a fifty-person team, and now a team that's in the hundreds, requires a very different leadership and management style. It requires active effort. It doesn’t just happen.
What has helped me recently is having a strong leadership team and understanding that I can’t be broad and deep in a lot of areas. That requires figuring out how to set KPIs and delegate accountability to your leadership team. I also had to focus on the things that I’m great at, rather than good at. I knew that my strength was product, so I needed to focus on that and then hand off the rest. I also had to figure out how to disconnect, but also support and coach our team without actually being there in the trenches with them. That’s one of the most difficult things for a hands-on founding team to be able to do.
Why did you decide to initially fundraise? What factors were most important to you in choosing which investors to partner with?
Fundraising helps us grow faster. Rather than waiting for the profit from our early cities to pay back so we can launch new cities, we can take in capital and start to do that all at the same time. That was the main reason for fundraising.
For your first few rounds of institutional funding, we believe that choosing the right partners and investors is more important than optimizing for valuation. Therefore, we spent a long time with all of our early investors. For the first three rounds of funding, we spent almost a year with each of the investors before taking money from them. By the time that fundraising came around, we had such a strong relationship, with trust on both sides, that it was a very easy decision.
How do you plan to utilize the investment to continue to scale the company?
Now that we have figured out the business model, we now are shirting to the next stage of growth, which is figuring out how to take what’s working in 15 cities to 150 cities. We just successfully launched our first international markets with Sydney and London. The next step is how we can expand our business and team internationally.
FIRE ROUND QUESTONS
At the end of your career, what do you want to ultimately be known for?
I want to leave the world in a better state than when I started with it. My hope is to shape a product that will then shape the world.
I am a great leader, if I…
Help my team succeed. That’s been a big mindset change for me. When we were a small company, it’s about heroics on certain projects and helping to get big initiatives across the line. As we’ve scaled the company, I've learned that the only way we'll succeed is if I help my leaders. I really see that as my only job now.