Favor’s office looks so nondescript from the outside, I walked completely past it the first time. It could be any old warehouse in Georgetown. Unlike the WeWork buildings and other startup incubators that litter the city, there are no grand signs or smiling desk people. And there sure as hell aren’t any free muffins. That’s mainly because… well, it’s still being renovated. Sure the exposed brick walls, concrete floors, steel beams are there (you wouldn’t be a real startup without them!), but it’s pretty clear it’s all a work in progress. And so is Favor. Kind of.
Favor is not your traditional startup. They service 18 cities. They’ve completed over a million deliveries. These are not a couple kids just fooling around, this is a real, fully fleshed out delivery company. D.C. General Manager Yohan Ferdinando knows exactly what he’s doing. Before Favor he was the Regional Operations Manager with Postmates, which is available in over 40 cities. The D.C. team may be on the small side, but it’s almost an optical illusion. There is some serious force and knowledge behind the company. I chatted with Ferdinando about whether or not he still thinks of Favor as a start up, what sets them apart from the other million delivery services (like Postmates and DoorDash) in D.C., and then he told me all about those ridiculous tuxedo t-shirts.
Usually when I do these, I’m dealing with a much smaller scale than Favor. You guys are operating in 18 different cities. You’ve completed a million deliveries
So, usually I start out asking about the company’s origin story.
I can give you a great origin story.
I’m sure you can, but I’m more interested in the story of how you came to Favor.
Well, I came to Favor from Postmates. I launched Postmates here. So, that origin story is pretty interesting.
I would love to hear about it.
So basically, with Postmates, I was instrumental in their expansion of the East Coast. I helped launch their first East Coast cities, including D.C. I’m a D.C. local, so that was a great experience for me. When I left Postmates we were in 40 cities. When I joined Postmates we were in three cities.
In the last two years the space has grown a lot. Favor’s been around. I was always aware of Favor while I was at Postmates, but not to the same level. These guys, Zac Maurais and Ben Doherty (co-founders of Favor) reached out to me towards the middle of this year and a lot of what the conversation was at that point, looking from the outside in, I was coming in with the perspective of, I’m at a bigger company, a brand that seems to be growing, getting partnerships… That was when we closed Chipotle, and a few other big partnerships that really helped us get into the mainstream… Why am I going to make a move?
But I think that, what’s really neat about this company is that all of these other companies come into a city and work to be masters of the local. While they might hire someone that’s from the city, a lot of what goes into the marketing, and things like that, isn’t necessarily local, right? It’s really a hub and spoke model. So I think a lot of what resonated with me, with Favor, is that during my time at Postmates I really did see the far departure between really truly being a part of that city. Without knowing its customers. When your customer service is in San Francisco, when your Postmate support is in San Francisco, when you get a call from someone three hours away and you’re in the middle of a snowstorm and a vendor is closed and you’re trying to deliver and they’re like, “What’s going on? It’s the middle of the day. Why is the vendor closed?” And you’re like, “Do you know the news, that there is three feet of snow on the ground?” No. They don’t. Because they’re in San Francisco. You can’t really empathize with your customers, your team, because you’re not there with them.
So, outside looking in, that was a huge thing for me. I saw it as a huge advantage. So many companies are moving away from putting brick and mortar spaces in each city, and growing a local team, more than just one person that is essentially keeping the ship afloat. So that was a huge, huge difference in Favor. But, also, there was a visit that truly made me make the decision.
There was a visit to Austin. I went into their office and I couldn’t tell who was who because they’re all wearing these shirts. Like, I couldn’t tell who was our VP of Biz Dev, or who was the last runner, or a mentor, or someone who was working on support. And that’s really… to someone outside of that space, you’re like, this is crazy, it seems disorganized… And for someone that’s in the space, it’s really refreshing. It’s like, “Oh wow, all of these people are involved… All of these people, whether it be the runner to the CEO, they’re all in it together.”
What’s also really neat is, Dara is actually one of our best runners. She came here from Austin, and she’s one of our D.C. moderators. So, the way Favor works, we put a lot of focus into the runner experience, because providing them with support allows them to do a better job and it resonates with a customer when they have have an excitement. When someone’s not just, “Oh yeah, I’ve got this order, here you go.” What’s great about that is our runners really do a lot of… our operations starts from the runner. So when we launch in a city, it’s me and a bunch of runners, but then those runners become our moderators and they start doing dispatch. Then they become mentors and essentially bring other runners in and train them. Through all these 18 cities it’s really interesting is that, when you look at a city like Boston, where we’ve been longer, and you look at their team, it’s a pretty big team, and these are not just their runners. They’ve got a ton of runners, but they have an in office team of about seven or eight, but all of those people, aside from Andrew, are all runners. So then they become moderators, who are employees of the company. And they become community managers who are employee salaried. That’s where I saw a huge difference and that’s what got me to move over, because I saw something that was really built with the right infrastructure. Built to scale.
So while we’re still in 18 cities and Postmates is in 40 cities, our 18 cities are strong. We’re built to last. And this is where a lot of people look at this space as a sprint, it’s not a sprint. If you look at delivery, you look at Postmates and that company is doing well, and there’s Door Dash, and all these different names, but there’s GrubHub and there’s Doctor Delivery, or whatever that’s local, and there’s all these different delivery companies, but when you really want the service, the best service will win. It’s definitely a marathon, and we look at it that way.
It definitely seems like a market that’s saturated, and it seems like Favor has been promoting that it’s faster, that speed is what sets it apart from the other delivery companies. Now, I think that’s fine, but almost kind of boring, right? That that’s the only aspect? Do you think the lack of clear hierarchy in the company, the possibility that contractors can become full time employees, do you think that is instead what sets Favor a part?
The thing about speed is, there are three things when you think of customer service when you’re getting something delivered. Making sure it’s the right thing, that’s paramount. Being updated, knowing what’s happening. You get a FedEx shipment, great you get it over night, but if it’s something that you really need, and they’re like, “Hey, it’ll be there in five hours,” you’re like, “Uh,” but you don’t have another choice, because there isn’t another FedEx. There isn’t another company that tells you at every point. So, communication. Finally, speed. So what we do is, you don’t want your pizza in an hour and a half, it’s going to be cold. You want it faster. Really what sets us apart, and yes, the hierarchy does, and we can shout that on top of a mountain and that doesn’t mean that other companies are going to start doing that, right? We’re in a space where a lot of people will look at that as a weakness and say, “well, that’s not going to scale.”
We’re a lot faster because we’re more personalized. It’s a personal delivery assistant. When you order on PostMates, you put in the order, the order goes into their receptacle, but it goes to San Francisco. Some one picks up the phone in San Francisco, three hours behind you, and their job is to get through that call as fast as possible and they’re placing your order. They’re not getting tipped for that order, it’s not their order, so they don’t really have an incentive to make sure that’s right. They just have the incentive to move onto the next run. Now, who is double checking it? The person that’s in there actually picking up the item for you? The person that’s QA-ing it? It seems kind of strange. If you order a hundred people to run, and another hundred people to call in the orders, why wouldn’t you just order a hundred people who can run and call in the orders? Because they’re just better. So that’s the huge difference. A lot of companies do this approach of, “Well, we don’t want to trust you to do that, we want to make sure it’s right,” but you’re incentivizing the wrong thing. Empowering your team locally to do it right, having support so they can do it right… There is no local dispatch for Postmates or Door Dash, it’s all handled from 3,000 miles away. You might never talk to that person again, and you’re definitely never going to see them again. The funny thing with us is that you talk to the moderator at 3:00 PM and if you’re still working at 6:00 PM that same moderator may be in line running with you somewhere.
We are really trying to build something that’s way more interconnected, so that it really does start to feel like you’re sending a friend and you can count on it to get done. Whereas when I’m ordering on another platform, I’m just rolling the dice. Maybe three out of five times it will be right and I’m definitely not going to get updates along the way.
Do you consider yourself a startup?
We’re kind of like a… We’re definitely still a startup, even as a company. In this space we’re definitely not the clear front runner, but in terms of where we are, our size, and how long we’ve been in the market and things like that… The way we run in each city is very much akin to a startup. I think every city has its own unique brand in the way that we take on the characteristics of that city and our runners. So when you look at a picture of a group of people who are at the runner meetup in Austin, and you compare it to what we’re going to do tomorrow for our runner meet up, it’s kind of different. Our crews different, but the mentality is still the same. The goal is still the same, but it’s kind of like a little startup in each city.
How many runners do you guys have right now?
We’re at about 100.
What’s the average amount of runners in a city?
I’d say most cities are around that mark. We stay close to that area and then the bigger cities go much higher. There’s, I believe, a few hundred in Austin. We have 3,500 active runners, I believe, across all markets.
It’ll definitely ramp up, but a lot of that too is that less is more, sometimes. To be honest, when I was leaving Postmates, D.C. alone was close to 1,000 Postmates, but the output of that thousand Postmates is probably equivalent to what 200 runners would do. With 1,000 active Postmates, the only true number of people that are actually doing jobs are probably less than 100.
Like, full time or just doing it at all?
Doing it at all. You have a 30% turnover every month. Every month.
That’s pretty wild.
It is unheard of. That was probably why too, when this opportunity came up, I’m looking at, how this is sustainable? It’s not. In my mind, I can’t really continue to meet growth and run at that rate, but they’re finding some ways to do it.
I think one of the things I would champion a lot at Postmates is that 20-25% do 80-85% of the work. So how is that fair that they make the same as the rest? But there is a supply and demand belief that’s a little bit different, and when you’re looking at just the numbers, you say, “Well, there are people that are going to need work and we’re going to supply work, so the workforce will be replenished.” That’s one end of the spectrum, where the other end is find good people. Develop them. Have them get something out of it other than just the money they made that day, and that will take you further. It will permeate out into all aspects.
How do you find good people? What do you look for in a runner?
I think what it is, is the opportunity to improve. It’s not necessarily that you come in as a runner and everyone is going to be awesome. What was hugely different between Favor and Postmates was because of how many runners or riders or drivers are turning over every month there’s always a peddle down on hiring. So it’s strange to hear from me that I’m not hiring at all this month. That’s because the turnover is way lower, but also because… basically they would have these large orientations where all these people would come in and there would be a tutorial, they’d run a video, do a presentation, and you’re out the door, “See you later!”
There’s no continued development. For us, it’s just way different. First, they speak to someone on the phone, before they come in for an orientation someone talks about the position and answers all their questions. We also get a good feel on whether this person is enthusiastic and things like that. From that step, they come into orientation, they get a presentation, it takes a little longer than the Postmates presentation, probably double that, After the presentation, they’re still not done. After that we take them for a ride along and after that that mentor is their point person. I’m also their point person, and that creates this filial relationship amongst our runners. We encourage our runners to hang out while they’re on duty. If the lunch rush passes and we’re not as busy, I’m shooting out coordinates of where everyone else is so they can go and hang out. Our runners will actually hang out at GW with their shirts, and it’s funny because it works. You know? You’ll turn your head and be like, those shirts are ridiculous, why are they all wearing those shirts? And they’re out there having a great time. We don’t say it’s something you have to do, it’s just something they like to do. They’re on duty anyways.
It’s not set it and forget it type of thing. We spend a lot of time identifying what strengths are of runners, what weaknesses are, and helping them get the most out of the platform.
Do you actually wear the t-shirts every day?
Oh yeah. I just took a sweatshirt off that was also a Favor sweatshirt, and I have the t-shirt on underneath. I wear it every day. There might be one day I don’t, but to be honest, I do wear it almost every day. It has to be a conscious decision not to do it that day. It’s just so easy. I don’t have to think about what I’m wearing. You just put on a tuxedo tee. When I was at Postmates I would wear the Postmates t-shirt, but to be honest, there’s just looks like an undershirt. This is a statement. It’s a fashion statement. Dara and I were out last night and someone was literally clowning on my shirt because we were trying to sit down at the bar, and she had sat down already, and a chair opened up and I was about to sit down, and the person got all mad like, “ I’m gonna grab that chair,” and I was like, “It’s okay, I was only here for that last hour, but no big deal.” Which lead to, some more words… and the first thing he went on was my ridiculous shirt and that just made me laugh. It was like, oh, little do you know. He was like, “Man, why would you wear that shirt, that’s ridiculous.” Yeah, that’s the point. You noticed, right? That’s the point. You noticed.
But yeah, that’s what it takes. That continued support. Our runners truly feel like they are a part of something bigger. Coming from somewhere else in this space, it’s really refreshing. On the outside looking in, a lot of people will think “There’s a lot of competition, but this person is in the lead.” It’s easy to make that assumption without knowing what’s actually going on in the space. People always mention in this space, Google will come in and absorb everyone, or Uber will come in and wipe you guys all out. UberEats works for five options and getting it in fifteen minutes, awesome. It’s going to take a really long time for them to get every restaurant to a position where they all want to partner. People want options. They don’t want to just choose from five things. If you want something in fifteen minutes, great. It’s a great option. Uber finally figured that out. Believe me, when they tried to do Uber Rush in New York and actually courier stuff, and deliver stuff, it was a huge failure. This is going to sound harsh but, how many Uber rides have you taken in your life?
Oh, god. I don’t know.
Over a hundred?
I’m not saying across the board, but what percentage of those rides, or those Uber drivers would you trust to get your groceries?
I don’t know.. I have pretty good luck with Uber drivers.
So like, 80% you would trust?
Let’s make it a good 75%.
Wow. That’s really high.
Uber drivers love me. What can I say?
Well, you’ve had really good luck with Uber drivers. I think that’s one of the biggest things, you have a huge, and it’s the same thing with Postmates, you have a huge spectrum of people that are coming on. It is like rolling the dice. So our goal is to say, we don’t want our customers to have to roll the dice and we don’t want out runners to have to go somewhere else. We want them to find this and stick to this. Who knows? Postmates gets a hundred million dollars next year and they start to say, “Every time you work we’re going to pay you this much more,” and what’s funny is, yes, you’ll have some people that are going to take that offer up, but what we’ve built, and what we work to build is something where it’s not just about the extra dollar you make. It’s more about, if three delivery services had a holiday party on the same day at the same hour, which one are you going to go to? And we want to be where they want to hang out. That’s kind of the light way of putting it, but that’s true community.
How do you decide what gets featured?
There are a lot of different ways, early markets are really listening to their customers. So I might start out looking at local sources, now, I had a little more insight because I’m also coming from two years of curating at PostMates. So, shameless to say, I’m going to go with something I know is really popular across the board. That comes from competitors, to Yelp, but also just my local knowledge of the city. I’ve been here my whole life. So, I’ve seen it change a lot. I’ve seen what’s popped up, so there’s that. Local bloggers are huge. Afterwards we also look at who is ordering, so we start to curate the list based on who is ordering. Not just what a majority is ordering, but what one specific customer might be ordering a lot of. Well, then that should just be easier for them to order.
What’s really neat and what’s coming down the line… We’re fooling around with this right now. Don’t get me wrong, we still have some good technology in the background. our data scientist came from Google and he’s been doing this really cool project where we’re looking at specific customers and what they’re ordering, and looking to feature to them something different then what the person sitting next to them might see. We can only do that for customers that are repeat customers, but we have a really high cohort of repeat customers, so once they hit that threshold, we can start to curate their list in a way that’s almost akin to, “It’s Friday night, I want to go out. Where should I go?” But it would be more like, “Oh, I’m hungry, what should I eat… oh those are five great options.” And they’ll just pop up at the top, not just based on your location, but based on your order history.
Remember back when there were video stores?
I do remember!
You’d go to Blockbuster and it would say “If you like this… try all of these!” So, in a way, it’s going to do that.
It’s like your Netflix queue.
Exactly! there you go. Thanks for bringing me forward.